Is Pay-Per-Mile Insurance the Answer for Self-Driving Cars?

Most auto insurance companies are unprepared for the arrival of self-driving cars. Metromile, however, is a firm that charges based on how much you use your car and could reflect how auto insurance will work in the era of self-driving cars.

Self-driving cars are coming. Fast. Many obstacles remain, of course, including who will be responsible when a self-driving car causes an accident. Those details will eventually work themselves out, but 74 percent of auto insurance companies are not prepared for the arrival of self-driving cars, according to a recent KPMG survey.

One company that appears prepared, according to Driverless Transportation, is Metromile, an auto insurance firm that charges you based on how much you use your car - pay-per-mile. The service, available in California, Illinois, Oregon, Pennsylvania, Virginia, and Washington, claims it can save the average driver $500 per year on insurance costs.

As author Burney Simpson points out, “I use my car about an hour a day. Why do I need to insure it for 24 hours?” Whether you agree with that statement or not - someone could damage/steal your car while it’s parked in your driveway - it’s an interesting concept that might reflect how auto insurance will work in the era of driverless cars.

Here’s how Driverless Transportation describes Metromile:

Metromile gives its pay-per-mile costumers a free Pulse device that must be plugged into the diagnostic port (OBD-II) of their vehicle. The consumer also must download a Metromile app from either the Apple store or from Google Play. The device tracks miles traveled, and certain vehicle performance data and sends the information to the customer’s smartphone and to Metromile.

Metromile charges a monthly base rate, along with the per-mile fee. These charges depend on driver age, driving history, credit history, the vehicle and other factors. Per-mile fees stop after 150 miles a day (250 in Washington) so the customer can take an occasional long trip without getting hit with a big charge.

The Pulse doesn’t track driver behavior like hard stops or speed, according to Metromile. It does offer a mapping service and can be used to find your car. In Chicago, Los Angeles, San Diego, and San Francisco, it has even been programmed to know when street sweeping will occur so the driver can move the car before getting a ticket.

We’ll have to wait and see how everything plays out, but this seems like a viable option at this point. A recent report from the University of Michigan’s Transportation Research Institute (UMTRI) found that Americans are spending less time in their cars on a daily basis, suggesting that consumers may be open to the use of shared self-driving cars.

Speaking at the 2015 Executive Forum, Aviva Canada’s President, Sharon Ludlow, said that “we expect traditional motor insurance to become niche to obsolete within two decades.” Numerous forecasts have suggested 2020 as the year self-driving cars become available to the public in select markets. 2020 isn’t far off, so the auto insurance industry better get its act together.

About the Author

Steve Crowe · Steve Crowe is managing editor of Robotics Trends. Steve has been writing about technology since 2008. He lives in Belchertown, MA with his wife and daughter.
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